 "RIL offers discount on fuel sold at some Gujarat outlets")
The Mukesh Ambani-led Reliance Industries Ltd (RIL) is offering discounts on diesel and petrol at a few fuel stations in Gujarat and the scheme may be widened if sales increase. Some retailers, however, fear the discounts could jeopardise their income.
Sources said RIL executives last week visited Gujarat to find out why sales at fuel outlets were not picking up. After their visit the company decided to launch the discount scheme. A questionnaire to RIL regarding the development did not draw a response.
“RIL is offering a discount of Rs 2 per litre of diesel at a few company owned, company operated (COCO) retail outlets. If sales pick up, the scheme may be extended to other cities,” said a RIL fuel retailer in Gujarat.
RIL had over 750 working retail outlets till December 2015. It has a 1,400 retail outlets in all. While diesel sales are up 64 per cent quarter-on-quarter, RIL said after its third quarter results it had achieved the highest retail outlet throughput of nearly 200 kilolitres per month compared to key competitors.
RIL said it re-secured its customer base with a 3.5-per cent market share. Diesel is RIL’s mainstay.
At its company owned, dealer operated (CODO) outlets, RIL is offering a discount of Rs 1 per litre of diesel and petrol. RIL has offered to bear 75 paise of the discount and the rest will be borne by dealers. The discount schemes, dealers said, would be in place till May 2016.
“This way RIL will jeopardise our business. One, if it offers a Rs 2 discount at its own outlets, why will customers come to us? Two, if we are to bear 25 paise in the Rs 1 discount, it will further dent our income. RIL has not revised our commissions, which are 25 per cent less than what dealers of state-owned oil companies receive,” said a dealer operating a retail outlet owned by RIL.
RIL pays a dealer commission of Rs 1.22 per litre on diesel and Rs 1.96 in petrol. Dealers have been asking for a raise but RIL has not heeded their requests.
Industry players said, given RIL’s handsome gross refining margins, the company could offer a larger discount to customers. The gross refining margin measures earnings from turning every barrel of crude oil into fuel.
RIL has been posting strong gross refining margins, defying the Singapore benchmark by $3-4.5 a barrel for two consecutive quarters. The October-December quarter saw its GRM increasing to $11.5 a barrel from $10.6 a barrel in 2014-15. A major factor, RIL said, was reduction in the crude oil basket cost.
